On March 9th, South Dakota Governor Kristi Noem vetoed House Bill 1193, which aimed to amend the state’s Uniform Commercial Code and exclude cryptocurrencies and other digital assets from the definition of money, except for central bank digital currencies (CBDCs). The bill received criticism from many conservative advocates who support financial freedom, but Governor Noem believed it would put South Dakota residents at a business disadvantage and potentially allow for federal overreach in issuing a digital dollar.
The proposed UCC amendment would have defined money as “a medium of exchange that is currently authorized or adopted by a domestic or foreign government.” Although the bill excluded many digital assets, analysts claimed that the wording would not apply to CBDCs. Governor Noem expressed concerns that expressly excluding cryptocurrencies as money would make it harder to use them and may lead to a future where a CBDC becomes the only viable digital currency.
China’s central bank has been conducting trials for its CBDC since April 2020, but the U.S. government is still exploring the potential benefits and risks associated with issuing a digital dollar. There has also been pushback against CBDCs at the federal level, as evidenced by Representative Tom Emmer’s recent legislation aimed at limiting the Federal Reserve’s authority over a CBDC.
Overall, Governor Noem’s decision to veto the bill reflects the ongoing debate over the role of cryptocurrencies and digital assets in the global financial system, as well as the potential impact of CBDCs on the economy and financial freedom.